Hungary’s foreign trade is affected by the weakness of the German economy, as exports have been falling for months. New manufacturing capacities coming on stream at the beginning of this year could improve the situation, as reported by Világgazdaság.
Not only the industry, whose output dropped by nearly 6%, but also Hungarian foreign trade, and exports within it, have been extremely weak. In December, exports fell on both an annual and monthly basis, by 20% compared to November alone.
The weakness of the European Union’s flagship economy was already well known, but there were hopes that the Hungarian one could regain some of its independence. Márton Nagy, Minister of National Economy, explained the opposite to Index:
Hungarian growth […] depends on the German economy, and their decline affects us. The Hungarian economy is starting to feel the effects of the slowdown in Germany,”
In the past, the two countries’ industrial performance diverged sharply, but recent figures show that the link remains strong, with 25% of exports still going to Germany, albeit including re-exports to China.
As for the outlook for this year, we can expect better economic performance in 2024, which will always boost imports, while external demand will remain weak.
This might result in a weak year for the external trade balance.
However, if there is a strong quarterly performance, it could have a positive carry-over effect, helping economic growth this year. The analyst interviewed by the paper sees economic growth of around 3% in 2024 as realistic.
Via Világgazdaság; Featured Image: Pixabay